U.S., Mexican, and Canadian trade negotiators meet this week in Washington DC for the first of seven lightning rounds to reshape what Trump calls the “the worst trade deal” ever signed, the North American Free Trade Agreement, or NAFTA.
Twenty-three years on, NAFTA needs an upgrade. E-commerce and digital rights are missing. Intellectual property rules have evolved since the signing. Labor rights and environmental standards, included the first time around in side agreements, can and should be strengthened. On these issues the three countries generally agree, and for most of them they already have hammered out language through the Trans-Pacific Partnership, or TPP.
There are areas of discord. The Trump administration has suggested doing away with Chapter 19, which created binational panels to resolve commercial disagreements. Mexico and Canada in particular are unlikely to let this dispute mechanism go, as it has limited the use of antidumping and countervailing tariffs between the nations.
The U.S. is also demanding unspecified actions to reduce its trade deficit; neither of America’s partners are likely to welcome introducing new tariffs or quotas. Still, if given space, the professional negotiators on all three sides should be able to overcome their differences.
More likely to throw the negotiations into disarray is the U.S. president himself. While silent on NAFTA since spring, recently leaked transcripts of President Donald Trump’s initial call with Mexican President Enrique Peña Nieto reveal the real dangers for the free trade agreement’s future.
Talking for just shy of an hour, Trump’s banter shows how little he knows and cares about the domestic politics and constraints other leaders face. Throughout the call he returns to the issue of the border wall, pressuring Peña Nieto to publicly acquiesce to some sort of payment even as he admits that Mexico will not, in the end, fund his campaign…